Marketing is a very crucial aspect of any business organization. The success of an enterprise, to a great extent, is dependent on it (Hutt and Speh, 2005). Basically, it is a process through which the company can reach out to its customers, interact with them and develop effective relations that would help in the development of a strong image in the target market(s). This report consists of an analysis of environment that Tesco, a giant retail organization in the UK. Here different tools for marketing analysis such as SWOT and PESTLE would be used in the research. This study would help in conducting a thorough analysis of the UK retail industry.
Tesco is a big retail organization in the UK. It provides different Fast moving consumer goods (FMCG) and products at competitive price. The mission of the firm is to deliver high quality, efficient and effective products and services to its customers at best price, to improve their overall shopping experience (Witt and Moutinho, 2014). While it is corporate objective includes becoming a leading retail organization in the UK and provides its customers with high-quality services.
Since its establishment, the retail store has been able to work on these objectives and attain them to a great extent. It can be supported by the fact that the company owns several retail stores across the UK and in many other countries around the world (Chonko and Hunt, 2007). The mission of the retail giant is to provide effective retail products and services to its customers. Through this aim, management of the organization strives at satisfying the needs and demands of its clients and attempt to gain their loyalty. Furthermore, this aim would also enable the organization to work much efficiently and effectively in the retail industry. This way the firm can sustain in the market and also gain as well as retain its competitive position.
Since its establishment, the retail store has been able to work on these objectives and attain them to a great extent. It can be supported by the fact that the company owns several retail stores across the UK and in many other countries around the world (Chonko and Hunt, 2007). The mission of the retail giant is to provide effective retail products and services to its customers. Through this aim, management of the organization strives at satisfying the needs and demands of its clients and attempt to gain their loyalty. Furthermore, this aim would also enable the organization to work much efficiently and effectively in the retail industry. This way the firm can sustain in the market and also gain as well as retain its competitive position.
In the following paragraphs, internal and external environment to Tesco has been carried out through tools such as SWOT and PESTLE analysis, respectively.
It is a tool through which internal environment of an organization can be assessed thoroughly. It helps in identifying and understanding various internal factors that affect operations of an organization (Jüttner, Christopher and Baker, 2007). Such an analysis is important from the viewpoint that it helps in obtaining understanding about the functioning of an enterprise. This way different factors and forces that affect the company, internally, can be easily identified, thus enabling the management to take steps that would help in managing them and resolving any issue(s). In the following points, SWOT (Strengths, Weakness, Opportunities, and Threats) analysis of Tesco is presented:
This is a tool to analyze or evaluate the external environment that an organization operates in. It is crucial that such environment is thoroughly assessed, so as to make sure that the company operates in an efficient and effective manner (Kotler, 2011). The following points present PESTLE (Political, Environmental, Social, Technological, Legal and Environmental) analysis of the retail industry in the UK.
The retail industry is one of the biggest players in the UK. It can be supported by the fact that there are 539000 establishments within the country which collectively contributes 10.3 percent of the UK businesses. In this sense, it may not be wrong to say that this sector is crucially important for the country as the market size is immense. At present, there are around 90 retailers and 60 wholesalers, and it is expected in coming years that demand for the retail industry would rise considerably, but the falling value of Euro is a major concern (Hollensen, 2015). Due to this reason, a shortfall in the demand for luxury products can be expected that would influence the performance of the industry. For Tesco, there are many competitors. Firms that the cited retailer needs to compete against are the likes of Wal-Mart, Asda, Morrison and many more. These firms are the big players in this market and control a major portion amongst them.
The retail store essentially provides various kinds of products and services at competitive rates. For instance, the price of its self-packed products is much less than that of the market price. Further, there are many types of brands and products. The price and attributes of these products and services are different from one another. The organic products are costlier than regular products while the branded products are at competitive rates. However, the self-packed products are offered at a lesser market price as it has got the benefit of economies of scale (Cova and Salle, 2008). However, these self-packed products also have some major downsides as well. For instance, customers always compare prices of organic products with self-packed products without considering their attributes. This results in dissatisfaction among the customers.
On this basis, it can be suggested to the company that it must change its marketing strategy and tactics. It must promote its products, i.e. organic, branded and self-packed, by highlighting their attributes as against price. This would help in attracting the customers, both existing as well as prospective ones. Further, the marketing strategy must now focus on expanding operations of the company to other parts of the world such as Australia where there is less competition in the retail industry (Jüttner, Christopher and Baker, 2007). For instance, establishing operations in various countries could help the retailer to cater to demands of a large customer base. This will help the firm to establish itself in the international arena.
For this, the marketing objectives could be related to highlighting the USP of organic products produced and packed by the company itself. The objective here would include aspects to increase market share of the retailer in the organic food market (Belz and Peattie, 2009).
It is assumed that single Tesco store sells 500 units of organic food which cost the company ₤1000 at a sales price of ₤4 per unit and thus generating revenue of ₤2000. Thus, the store will generate the profit of ₤1000. However, the company invests ₤1000 on the marketing of its organic products, and it increased the sales to 2000 units (Liu, Kasturiratne and Moizer, 2012). Thus, the cost incurred on 2000 units is ₤5000, and it generated total revenue of ₤8000 and thus giving the store a profit of ₤3000. This shows that by investing ₤1000 in marketing, the store can increase its profit level from ₤1000 to ₤3000.
Marketing is that aspect of business enterprises, which if not considered properly or maintained appropriately, could be very harmful to the organization. The existence of companies, to a great extent, is dependent on it. During this research study, it was noted that Tesco operates in a very volatile and highly competitive marketplace. Due to this, it needs to pay a lot of attention to its approach to marketing. Further, the study also revealed that future of the retail industry in the UK is bright, as it is expected to grow, but at a slow pace. Further, on the basis of SimVenture software, it can be suggested that company should invest in its marketing strategies for its organic food products as it will increase its profit margins.
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